Microsoft is to cut up to 18,000 jobs, marking the deepest cuts in the technology firm's 39-year history.
The bulk of the cuts, around 12,500, will be in its phone unit, Nokia, which Microsoft bought in April, the BBC reports.
Microsoft pledged to cut $US600 million per year in costs within 18 months of buying Nokia.
But the cuts are much more severe than the 6,000 initially expected from the firm which employs 127,000 globally.
Microsoft chief executive, Satya Nadella, who took over in February, wants the firm to shift its focus from software to online services, apps and devices.
"Making these decisions to change are difficult, but necessary," Mr Nadella wrote in the announcement to staff.
The firm said it also planned to have fewer layers of management "to accelerate the flow of information and decision making."
Microsoft said staff affected by the job cuts would be notified over the next six months, and they would be "fully completed" by the the end of June next year.
In total it said the cuts, including severance pay, would cost it between $US1.1 billion to $US1.6 billion over the next year.